Are lenders to sit behind remediation costs? We keenly watch the most recent Canadian case on this.
The recent first decision Canadian Qualex-Landmark Towers case (QL case) will make secured lenders of real estate and construction very nervous indeed. Whilst this is not precedent in England presently, the costs of remediation were deemed in the QL case to rank above secured debt on insolvency. All eyes will be on any appeal of this ruling. The ramifications both in Canada and potentially further afield are vast. The Canadian ‘Redwater’ case had previously held that a remediation costs order took priority over secured debt but not on insolvency. It is feared that the QL case whilst only at first instance is seeking to extend the Redwater reasoning to insolvency. The potential impact of the QL case and indeed the UK government’s call for increased responsibility for environmental clean up will bring uncertainty to the secured real estate lender market all over as law makers here will be keenly following the ruling in Canada.
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https://beale-law.com/article/environmental-obligations-prioritised-in-insolvency-proceedings/